“Free = Substandard Product” – 5 Entrepreneurial Lessons from an Entrepreneur

At pluGGd.in, our attempt is to be the platform where entrepreneurs can share their experience and others get to see the real side of the moon (dark or bright – it’s all about perspective!).

And here is Rajiv Poddar, founder of Callgraph (Skype call recording tool) sharing his experience of running Callgraph – he has some very candid and real-life insights to share.

We crossed an important milestone this month; we made it into the second year! The Call Graph client was launched on March 8th 2008 in the first edition of DevCamp Bangalore. We launched the services part in August a few months later, launched paid plans in November and since then we have been making revenues. Today Call Graph is a ‘ramen profitable’ venture. That is, the revenues are just enough to sustain our operations and meet our living costs. The last year has been an incredible learning experience. We made mistakes, stumbled, recovered, but somehow managed to survive. Not sure if we can keep doing that given the worsening economy, but for the time being here are few lessons that we’ve learnt the hard way.

Its The Business Stupid

A new venture is always about creating a sustainable business.  It is never about the product or the service. Its about how you can create enough value so as to enable the product or service to grow and get better with time. Coming from an engineering background its a very hard lesson to learn. The focus is more on the product. The product is obviously very important. But never ever lose sight of the business. If the product is not creating a sustainable business then maybe you’re doing it wrong.

You’ll Be Lucky To Have One Percent Conversion Rate

For any internet product or service, its assumed that you’ll have a conversion rate of 1 percent. It could be number of paid to free users, signed up users to active users, etc. In our case it is the number of times our users of the Client to the number of registered users on our website. We haven’t been able to achieve that 1 percent conversion rate yet. There are variety of reasons for that, one of the most important being the large number of international users. Its a simple chicken and egg scenario. Support for Internationalization requires effort but we cant spend it there since we dont have that much resources. Internationalization is really a tough problem to solve.

Free == Substandard Product

Its assumed that everything on the internet expected to be free. The reality is that giving your product away for free creates this impression that its somehow substandard. This is especially true if your competitors charge. For Call Graph the business proposition necessitated that we offer it for free. But we had a incredibly hard time dispelling this illusion. Adding a purchase option helped a lot. It is in fact our most popular plan.

Turning Cash Flow Positive Is A Moving Target

Its never ever that one single feature or that one plan which does the trick for you. By the time you implement it, things have changed and the potential customers have disappeared. It’s rather a culmination of all those features and plan which add up. What we’ve learned is to never rely on a single source of revenues. Especially in these recession times. You never know which one is going to earn your bread on any particular day!

It’s A Survival Game

Someone once said that the first 3 years of a startup’s life are the toughest. After that you just get used to it! That statement is sums it up. The world out there is tough and you need to evolve yourself with the only goal of surviving. Like as it happens in Cricket One-Dayers, batting through the 50 overs matters the most. The more you’re out there, the bigger the chances of making it.

Finally a big thanks to all our users who have helped us reach here. Thanks to all those who tried out Call Graph, pointed out the bugs and deficiencies and helped us improve it. You are simply the best!

Cross-posted from callgraph blog

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